We welcome Alan Brenner our guest blogger.  Alan is a Chartered Accountant from Taurus Business Partners.

The Government currently provides a non-means tested rebate for private health insurance premiums. The rebate can be claimed directly from the insurer, or as a tax offset when you lodge your income tax return. The rebates are currently 30%, 35% or 40% of the premium depending on the age of the policy holder.

Legislation has been passed that will apply an income test to the availability of the rebate to any premiums paid on or after 1 July 2012. The more income you earn, the lower the rebate as follows

Once your ‘adjusted taxable income’ is greater than $130,000 (or $260,000 as a family) no rebate will be available. Your ‘adjusted taxable income’ includes the total of

• Taxable income
• Adjusted fringe benefits
• Tax-free pensions or benefits
• Target foreign income (income earned overseas that is not already included in your taxable income)
• Reportable superannuation contributions • Total net investment losses.

Income thresholds Private health insurance rebate
Single Couple Under 65 65-69 70+
Less than $84,000 Less than $168,000 30% 35% 40%
$84,001 to $97,000 $168,001 to $194,000 20% 25% 30%
$97,001 to $130,000 $194,001 to $260,000 10% 15% 20%
$130,001 and above $260,001 and above 0% 0% 0%


For family premiums of say $6,000, this will result in an increase to the out of pocket premium costs of $1,800. The current rebate applies to a premium ‘paid’ during the income year. Accordingly, it follows that if you prepay your 2012-13 premiums on or before 30 June 2012, the current rules should apply and the rebate should be available.

If you are interested in this one-off savings opportunity, we suggest you contact your private health insurer to discuss the possibility of pre-paying next year’s premium.

Some private health insurance funds will allow you to pre-pay up to 18 months of premiums.


Find out how we can help you, contact us today